Bitter shareholders of troubled Maika Holdings are demanding explanations over the various aspects of accounts as published in the investments company's 2006 annual report.

They are not satisfied with the general manner the accounts for last year are published in the annual report.

"The directors need to be more specific. There are many hidden elements in some of the provisions," charged shareholder A Mutthiah when contacted today.

Another shareholder K Manohar said many questions remained unanswered by the manner the accounts were set in the annual report.

For example, he said there was no breakdown in the administrative expenses listed in the investment arm's income statements.

"The amount stated under administrative expenses runs to about RM50 million. Do they have that many staff or such high overheads?" asked the accountant.

He said MIC's investment arm should have revealed the number of staff it has and why the expenses incurred on them were so high.

"The report said the directors are not taking any payment or are only taking a minimum amount. If that's the case, how do they justify paying RM50 million for administrative reasons. Are they over-staffed?" he asked.

According to the annual report, the RM50 million is for administrative expenses incurred for the group (Maika and its four active subsidiaries). Maika as a company by itself incurred an administrative expenses of about RM6.4 million last year.

Questionable payables

Maika will be holding its annual general meeting on Aug 30 at the Sime Darby Convention Centre in Bukit Kiara, Kuala Lumpur, primarily to obtain consent from its shareholders for the sale of its only profit-making subsidiary, insurance company Oriental Capital Assurance Bhd.

Maika wants to sell the company for RM129.8 million to alleviate its financial burden caused by high loan interest repayment and accumulated losses suffered by the company.

Maika directors believe that the sale of the insurance company will result in it having a cash reserve of more than RM70 million after having settled its debt obligation.

However shareholders, including Manohar, are not buying into this.

"If you look at the accounts for last year, the amount to be paid for others, apart from the creditor banks, is very high," he said.

Going by the annual report, Maika has some RM40 million listed as 'trade payables'. Its 'sundry payables and accrued liabilities' alone stand at another RM22.5 million.

"What are these trade payables. Assuming that these must be settled after settling all loan obligations, what is there left as cash reserves?" asked Manohar.

He also questioned the high sundry payables, asking as to why no further details were given in the annual report.

"And by stating that these are accrued liabilities, are they going to write these off as bad debts in the following year?" he asked.

Doubtful debts

Other shareholders also similarly questioned the provisions of money received by Maika holdings for last year.

They said while it was pleasant that the company has listed RM63 million as money earned as 'trade receivables', it was still questionable as to why the company deducted about RM30 million as doubtful debts.

"Who are these debtors? Are the directors listing this amount as doubtful debts in the report so that next year they can say that they have failed to recollect this amount and as such they can write-off the amount?" the shareholders asked

They want to know the breakdown of the debtors and as to why the amount could not be collected from them.

Mutthiah also questioned as to why Maika incurred a high cost of legal suits as compared to the previous year.

"In 2005, the claims for legal suits against Maika stood at RM110,647 only. Last year, it jumped up to RM5 million. Who are the parties suing Maika and for what? The shareholders have a right to know," he said.

The annual report stated that Maika's subsidiary Maika Intellectual Resources was being sued for a breach of contract by an unnamed company to the tune of RM5 million. Maika said that it had filed a counter claim and that the matter will be up for hearing on Sept 6.

"Based on legal advice, the directors are of the opinion that the plaintiff's claim is not tenable," said the annual report.

Fiery affair

Manohar added that Maika directors must be able to answer in detail all queries raised by the shareholders in the forthcoming AGM. He also said the directors must also tell the shareholders as to how Maika would generate income after the sale of insurance arm OCAB, its only active subsidiary.

Maika meetings in the past have been notoriously known for their ill-tempered tone and, at times, even punch-ups.

Last year's AGM ended in controversy when shareholder and DAP national vice-chairperson M Kula Segaran was roughed up by a MIC state assemblyman for asking questions pertaining to the investment company's finances.

Maika's 2006 annual report, which has been sent out to the shareholders, revealed that it registered an after-tax profit of RM4.6 million.

However, it suffered a loss of RM9.03 million at group level, blaming the financial losses suffered by OCAB last year as the main reason, mainly as a result of the insurance company having to write off bad debts amounting to RM13.9 million.

Maika was established in 1982 by MIC president S Samy Velly purportedly to enable Indian Malaysians to have a share in the country's economic growth.

The company raised RM106 million in 1984 from 66,000 investors but some shareholders - after seeing little returns on their investments - have since accused the company of squandering the capital through dubious channels.

Maika's chief executive officer is Samy Vellu's son Vell Paari.